We just got wind of a note one of the big US banks forwarded around to clients earlier today. As one would expect, the hedge fund community loves EUR/USD and is quite long. What caught our eye is JUST how long they seem to be. According to the note, trading desks are seeing demand for bullish EUR/USD strategies outnumbering bearish strategies by a multiple of something like 20 to 1.
What does this mean for the average Joe? That the market is bullish but has already placed their bets. A healthy shake-out to put the market back in better balance looks increasingly likely.
1.3540/50 stops may prove a magnet if the market makers want to get their customers’ phones ringing.
